Richard Ellenbogen and I have been corresponding about Governor Hochul’s announcement that the Champlain Hudson Power Express transmission project has started construction. According to the press release this “accelerates progress to achieve New York’s goal of 70 percent of electricity statewide from renewable sources by 2030 on path to a zero-emission grid”. Unfortunately, Richard and I agree that there is more to the story than appears on the surface.
Everyone wants to do right by the environment to the extent that they can afford to and not be unduly burdened by the effects of environmental policies. I submitted comments on the Climate Act implementation plan and have written over 250 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that it will do more harm than good. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.
Climate Act Background
The Climate Act establishes a “Net Zero” target (85% reduction and 15% offset of emissions) by 2050. The Climate Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda.” The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the control strategies. That material was used to write a Draft Scoping Plan that was released for public comment at the end of 2021. The Climate Action Council states that it will finalize the Scoping Plan by the end of the year. I maintain that there are two underlying issues with the Climate Action Council approach for the transition plan: the Draft Scoping Plan does not include a feasibility analysis and the Council has not developed an implementation plan.
The ultimate problem for the future electric grid that is dependent upon wind and solar are weak when the load peaks in the winter because space heating is electrified. Wind lulls can reduce wind resources for days and solar resources are inherently low availability because the days are shorter, the sun is lower in the sky, and areas downwind of the Great Lakes are obscured with lake-effect clouds. The experts responsible for electric system reliability at the New York Independent System Operator (NYISO) and the New York State Reliability Council (NYSRC) both highlighted (here and here) the importance of Dispatchable Emissions-Free Resources (DEFR) to address future winter-time wind lulls in their Draft Scoping Plan comments. The Draft Scoping Plan also includes DEFR as a necessary component of the future grid to address this problem. I am particularly concerned that the Hochul Administration has not confronted the feasibility of DEFR. What options are there, how likely are they to be available when needed to meet the schedule of the Climate Act and how much will they cost should be a priority but the Council has essentially ignored the challenge and has not responded to NYISO and NYSRC comments. Furthermore, if an implementation plan was in place, it could encourage zero-emissions resources availability during future winter-time wind lulls, for example by discouraging utility-scale solar development where lake-effect snow is heavy.
Champlain Hudson Power Express
The Champlain Hudson Power Express (CHPE) project is a 339-mile underground transmission line capable of bringing 1,250 MW from the Province of Quebec to Astoria Queens in New York City. According to the press release it “accelerates progress to achieve New York’s goal of 70 percent of electricity statewide from renewable sources by 2030 on path to a zero-emission grid. It also is touted as bringing zero-emissions hydro electricity from Hydro Quebec directly into New York City so it can displace fossil-fired generating units.
I have published two previous articles about the project. The first described the residential cost impacts of the New York State Energy Research and Development Authority (NYSERDA) contracts with H.Q. Energy Services (U.S.) Inc. (HQUS) for the CHPE project. A year ago on November 30, 2021 Governor Hochul announced that the finalized contract for CHPE was awarded as part of the Tier 4 Clean Energy Standard that is intended to increase the penetration of renewable energy into New York City. My focus was on Department of Public Service petition: “The costs of program payments for the purchase of Tier 4 Renewable Energy Credits from the projects are projected as $5.9 – $11.6 billion, equating to an estimated increase in customer electric bills of 2.1 – 4.1% (or $2.08 – $4.08 per month for the average residential customer) on average across the State for the 25-year period of the Tier 4 contracts.” This is one of the few admissions of potential costs by the Hochul Administration. I estimated that if those costs represent subsidies needed for all the Integration Analysis renewable resources that the annual ratepayer cost increase range would between $168 and $359 for the average residential customer.
The second article described the comments submitted by Nuclear New York to the Department of Public Service on the Tier 4 contracts. Their comments pointed out that the contract payment formula treats CHPE like baseload power sources but without actually getting baseload service:
Quebec and NYC often experience the same weather. Consequently, CHPE will deliver electricity during low or moderate demand periods. But Hydro Quebec will keep all power at home during grim winter weeks, such as on January 22 of this year: Exports to ISO-NE (the New England grid) were reduced to the contracted minimum, and, instead of exporting power to New York, Quebec needed to import power from New York. On really cold days in the Northeast, NYC will get no power via CHPE and will again rely on fossil-fueled “peaker plants”. Yes, CHPE will get paid little for their electricity in the wholesale market if they fail to serve NYC in times of most desperate need. However, New Yorkers are still going to pay plenty for the Renewable Energy Credits generated during “nice weather” hours.
The lack of an implementation plan directly relates to this problem. As noted above the ultimate problem is getting as much zero-emissions electric energy as possible in order during the low renewable resource periods that are also expected to the highest load periods. Without an implementation plan in place, New York State committed to paying CHPE for capacity that is not guaranteed when we need it the most.
Three implementation issues concern me: the schedule, the costs, and jobs.
One of the most challenging aspects of the Climate Act is the schedule. As part of their planning responsibilities the New York State Independent System Operator (NYISO) recently released the 2022 Reliability Needs Assessment (RNA) that highlighted this concern concluding “while there is not an immediate reliability need, changes in the economy, new generation technology, extreme weather and policy drivers are creating challenges for the future grid that may require actions to avoid interruptions in electric service.” NYISO specifically referenced the CHPE project in the RNA findings:
The summer reliability margins improve in 2026 with the scheduled addition of the Champlain Hudson Power Express (CHPE) connection from Hydro Quebec to New York City but reduce through time as demand grows within New York City. While CHPE will contribute to reliability in the summer, the facility is not obligated to provide any capacity in the winter. The NYISO is expected to be a winter peaking system in the next decade as vehicle fleets and buildings electrify.
While transmission security within New York City is maintained through the ten-year period in accordance with current design criteria, the margins are very tight and decrease to approximately 50 MW by 2025. With the addition of CHPE project in 2026, the margin improves but reduces to near 100 MW by 2032.
The reliability margins within New York City may not be sufficient even for expected weather if the CHPE project experiences a significant delay.
Richard Ellenbogen and I share this concern. Richard described the project timeline. The project was proposed in 2011 and the PSC authorized it on 4/18/13. It has been 11.5 years since it was proposed, 9.5 years since it was authorized, and construction just started a year after the funding contract was signed. The likelihood of additional delays seems high.
The Draft Scoping Plan does not include detailed control strategy costs but from what I have been able to ascertain, it is clear that the potential costs are minimized. The record of this project reinforces my concerns. Ellenbogen points out that the CHPE website has an entry from 11/1 noting that financing for the $6 billion project had been obtained but it was originally $2 billion when it was proposed ($2.65 billion in 2022 dollars). That cost is 2.3 times the original cost. We agree that these projects are rarely ever completed on budget and with all the issues with supply chains and worldwide inflation I think this one will not be completed anywhere near the budgeted cost.
The Hochul press release said “the clean energy line is an example of how officials in the state are working to “confront climate change challenges and energy challenges together, in the meantime, creating great jobs for a cleaner, healthier New York.” It is notable that the New York State Energy Research & Development Authority press release for the construction start announcement emphasized a “major project labor agreement”:
The construction of this green infrastructure project, which begins following the execution of a major union labor agreement between the developer and New York State Building and Construction Trades, is expected to bring $3.5 billion in economic benefits to New Yorkers while creating nearly 1,400 family-sustaining union jobs during construction.
I recently addressed the State’s Clean Energy Industry Report and its handling of these “great” jobs. One point overlooked by Hochul is that while there may be “1,400 family-sustaining union jobs during construction” the number of permanent jobs is miniscule. Furthermore, the project will provide 1,250 MW of power to New York City but this is a fraction of 2,000 MW of power lost due to the shutdown of Indian Point. That shutdown meant the loss of over 1,000 permanent union jobs. While this project may “confront climate change challenges and energy challenges together” it does not replace the loss of Indian Point that was more effective in that regard.
I agree that this line is needed to maintain New York’s electric grid reliability and that the start of construction is encouraging. However, there are associated reliability and affordability feasibility concerns. The latest NYISO RNA report emphasizes that there could be reliability problems if there are further delays to completion of this project. The Climate Act transition plan schedule is ambitious and the Council has not considered a “Plan B” if there are unavoidable implementation delays for any of the components of the plan. This project is expensive equating to an estimated increase in customer electric bills of 2.1 – 4.1% (or $2.08 – $4.08 per month for the average residential customer) for just one component of the total resources needed. The Climate Action Council has not disclosed the total expected costs of the Integration Analysis transition plan or expected ratepayer impacts.
In addition to the feasibility issues this project exposes failures of the state’s lack of an implementation plan. The biggest challenge for the future zero-emissions electric grid is the winter-time lull when renewable resources are low. This project is not obligated to provide any capacity during those periods. Consequently, it is likely that more DEFR will be required. Unless the Hochul Administration comes to its senses and starts encouraging the development of the only scalable proven dispatchable emissions-free resource, nuclear power, this increases the risk that DEFR won’t be available as planned because the alternative technologies are speculative at this time.